Before Windows, there was MS-DOS. And long before the Department of Justice
filed the antitrust action over Microsoft Corp.'s Windows 98, a small
software company with Seattle attorneys had launched its own antitrust
case against the Redmond giant's marketing tactics for DOS. The 2-year-old
private antitrust suit, which claims Microsoft illegally drove out a product
competing with the MS-DOS operating system, could get a boost from the
federal case filed last month, according to some observers. Caldera, Inc.,
a software company based in Provo, Utah, accuses Microsoft of unfairly
undermining the competing operating system, DR-DOS, through licensing
agreements, pricing schemes and misleading public statements. The suit
was filed in U.S. District Court in Salt Lake City in 1996, says Microsoft.
Caldera also accused the software giant of cornering the market for operating
systems in the early 1990s by forcing computer makers to install MS-DOS
in order to get early versions Windows, which initially was a separate
program, running on top of the DOS operating system. "The government's
case could be quite helpful to Caldera," said Garth Saloner, a professor
of strategy and economics at the Stanford University School of Business
in Palo Alto, Calif. DR-DOS was discontinued in September 1994, shortly
after its developer, Digital Research, Inc., was purchased by Novell Inc.
Caldera acquired it from Novell. A Microsoft spokesman declined to comment
on the case. Caldera has attorneys from three law firms working on the
lawsuit, including The Summit Law Group in Seattle and the Seattle office
of Susman Godfrey L.L.P., which is based in Houston. The lead attorney
for Caldera's lawsuit is Steve Susman, a founder of Susman Godfrey and
one of the best trial lawyers in the country, according to one leading
antitrust lawyer in Seattle. Susman launched his antitrust career in 1980
by winning a $500 million settlement and verdict in a price-fixing case
against the Corrugated Container Corp. In Seattle, attorney Parker Folse
is handling the case for Susman Godfrey, especially on issues that involve
discussions with Microsoft. Ralph Palumbo is working on the lawsuit for
the Summit Law Group, which opened its doors 15 months ago. Palumbo was
one of 11 attorneys who resigned from Heller Ehrman White & McAuliffe
to start Summit. Palumbo and his colleague, Lynn Engel, brought the Caldera
case with them to Summit when they left Heller Ehrman to start the new
firm. Caldera also is represented by the law firm of Snow, Christensen
& Martineau in Salt Lake City. The case is scheduled for trial in June
of next year. Attorneys for both sides are now in the discovery phase
of the case, and plaintiffs' attorneys have taken between 40 and 50 depositions,
people familiar with the lawsuit say. Caldera's case appears to be the
only private antitrust lawsuit against Microsoft. But the case is important
because, if Caldera wins, it could establish anti-competitive behavior
by Microsoft earlier in the evolution of the personal computer. Caldera
also could benefit from government antitrust actions against Microsoft,
antitrust experts say. The federal government and 20 state attorneys general
on May 18 filed two antitrust lawsuits against Microsoft in the U.S. District
Court for the District of Columbia. The court later consolidated the cases
and scheduled a trial for September. If the government proves that Microsoft
has a monopoly in operating systems, it would be easier for Caldera to
argue that Microsoft became a monopoly in part by driving DR-DOS out of
the marketplace. The monetary stakes could be huge. If Caldera can prove
that it lost part of the market for operating systems because of unfair
competition from Microsoft, the Utah company can ask for triple damages
under federal law. Caldera's attorneys must show, however, that consumers
would have kept buying DR-DOS if Microsoft had not struck back. And if
Microsoft argues successfully that DR-DOS died on its own accord, Saloner
said, then nobody can blame the Redmond company for killing it. The story
is currently unavailable via the Puget Sound Business Journal Web site.
The story appeared in the print version of the Puget Sound Business Journal
on June 5, 1998.